Being heavily in debt in Louisiana can be overwhelming. It may seem like you have nowhere to turn but bankruptcy. While there’s a stigma associated with filing for bankruptcy, you should disregard it and know that there are many good things that can come out of it.
Emotional and social stigmas of bankruptcy
For many people, there are emotional and social stigmas associated with bankruptcy. While this doesn’t affect your finances in any way, it simply involves the way other people see you. Many people don’t know what bankruptcy truly means and why anyone would file, but there is a misconception that it means you’ve lost your money. However, while your creditors will know that you filed for bankruptcy, most other people will never know unless you tell them.
Bankruptcy is also very common. It’s estimated that around one in 10 American adults will file at some point.
You probably feel bad when you are unable to pay your bills. As a result, once you file for bankruptcy, you may feel guilty as it halts payments to your creditors. This is the emotional stigma associated with bankruptcy.
Financial stigma of bankruptcy
There’s also a financial stigma tied with bankruptcy. Your credit score will decrease once you file. How much it goes down depends on your situation. On average, most people’s credit score ends up at around 550 after filing for bankruptcy, but it doesn’t stay there long if you’re careful. You may have trouble qualifying for a loan or new credit card. Once you do qualify, you’ll probably have a much higher interest rate.
What are the benefits of filing for bankruptcy?
Although you might dwell on the stigma associated with bankruptcy, it’s important to remember there are benefits as well. They include the following:
- Helps you eliminate some debts
- Ends calls from collections
- Prevents garnishment
- Prevents foreclosure
- Protects some property from being sold
- Allows you to make a fresh start with your finances